Air Canada ruling raises interesting ‘specific performance’ question

Employment/Labour /
Ellen Low
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By Tony Poland, LegalMatters Staff • An Ontario Superior Court of Justice ruling in a wrongful dismissal case has a great deal to unpack but what makes it particularly interesting is the use of the rare “specific performance” remedy, says Toronto employment lawyer Ellen Low.

Low, principal of Ellen Low & Co., says the ruling in Ruel v. Air Canada has many in the employment bar talking but there was one particular aspect that stood out for her.

“This a large case that catches your eye because the plaintiff received a long notice period and the numbers are eye-catching,” she tells LegalMattersCanada.ca. “The sexier part of this case, the part that people latched onto, has been the more political portion of it – was the plaintiff entitled to a bonus because he was part of the executive team prior to his termination?

‘It really gets the wheels turning’

“We frequently talk about bonuses in many aspects. What makes this decision a star for me is the interesting alternate pleading of specific performance. It is what really distinguishes this case,” Low adds. “It really gets the wheels turning in terms of thinking how else could we as employment lawyers be using this and should we be pleading it more often?”

She explains specific performance is a discretionary equitable remedy that is granted when monetary damages do not adequately compensate the party seeking relief.

“It is a concept that has been around for hundreds of years,” says Low. “The idea is that you essentially get the performance of the contract itself rather than damages for the loss of the ability to continue in that contract.”   

The case involves an Air Canada executive with almost 25 years of service who was terminated in June 2020 due to the economic downturn caused by the pandemic. He received only two weeks’ notice and filed a claim against the airline for wrongful dismissal including damages for various benefits, stocks, pension, privileges or alternatively, specific performance.

Plaintiff was entitled to 24 months’ notice

The court ruled he was entitled to 24 months’ notice, or damages in the amount of $234,120, less any statutory amounts paid. As well, he was awarded:

  • $23,412 in group health benefits;
  • $160,148 for lost pension accrual benefits over the notice period;
  • $27,629 for spousal survivor benefits; and
  • he is also entitled to damages for Long-Term Incentive Plan benefits accrued during the notice period.

The ruling also included the specific performance remedy with respect to Air Canada’s retiree flight privileges. At the time of his termination, the man was less than six months away from qualifying for free flights anywhere Air Canada flies. An expert testifying on behalf of the plaintiff estimated that benefit was worth $1.8-milllion.

Would have qualified for flight privileges

Low, who was not involved in the case but comments generally, says if the man had been given a reasonable notice period, he would have qualified for the flight privileges.

“When something like this occurs, the usual civil court remedy is a monetary settlement. But in this case, that is not happening. He’s getting money for other pieces of the claim and specific performance for the flight privileges,” she says. “This is an equitable remedy. Rather than Air Canada having to cut a cheque for the anticipated value of the loss of the benefit, the plaintiff gets to go back into the plan.

“As an employer, which would you prefer? Put someone on the list of people who have retiree flight privileges or pay out $1.8 million.”

Low points out that the court ruled that if there are modifications to the flight benefit plan, it would include the plaintiff.

Any modification in plan would apply

“So, if in five years Air Canada changes the plan such as reducing the number of flights that retirees are entitled to, those modifications would apply to him,” she says.

Low says specific performance is rarely pleaded in employment law “but it makes so much sense.”

“I believe there has been a tacit understanding that most people are looking for pay in lieu when a dispute arises with some of these plans,” she says. “However, specific performance is beneficial from both an employee and an employer perspective. There are safeguards on both sides.

“I wonder about other applications in other pieces of the employment law compensation puzzle,” Low adds. “As a result of this ruling will we see more claims for specific performance? For example, in a stock option plan or a restricted unit plan, can the plaintiff’s participation effectively be reinstated over the reasonable notice period rather than trying to argue about damages?”